At today's monthly monetary policy meeting, the central bank's Monetary Policy Committee kept the monetary policy rate at 6.00% for the fifteenth consecutive month. The decision was aligned with our call and market expectations (according to the BCP's survey).
According to the statement, the committee reaffirmed its commitment to price stability and will continue to monitor domestic and external developments closely, anticipating their potential implications for inflation, and will take appropriate measures to ensure compliance with the 3.5% target over the monetary policy horizon. Moreover, the BCP highlighted the slight decrease in 12-month inflation expectations. Therefore, we estimate that the real ex-ante policy rate remains at 2.5% (using expectations for the monetary policy horizon), compared to the BCP's neutral real interest rate range of 1.3%-2.6%.
Regarding the global context, the BCP highlighted that the intensification of the conflict in the Middle East has generated high volatility in oil prices. Meanwhile, the Federal Reserve maintained the planned cuts for this year but anticipated a more moderate path of interest rate reductions for the coming years.
Our take: We forecast a policy rate of 6.0% for YE25. The policy rate is already at the upper bound of the BCP’s neutral range in real ex-ante terms. Leading indicators suggest positive momentum in economic activity, while inflation expectations for the monetary policy horizon (18-24 months) remain stable. The next monthly monetary policy meeting is scheduled for July 22.